Judge dismisses bulk of criminal charges against FedEx Corp.

Related case over shipment of illegal drugs not affected by ruling

SAN FRANCISCO - A federal judge dismissed the bulk of criminal charges against FedEx Corp. in a case alleging it knowingly shipped illegal prescription drugs.

Senior U.S. District Court Judge Charles Breyer said Friday the government named the wrong defendant in an agreement that gave it more time to file charges. As a result, the charges were filed past the statute of limitations.

Breyer denied the government's request to substitute the correct defendant and tossed out more than a dozen of the 18 counts against parent company FedEx Corp. and subsidiary, FedEx Corporate Services, Inc.

"FedEx's corporate structure is clearly described on numerous public websites - including sec.gov - which the government could have used to check its work in drafting the tolling agreement that underpins this novel prosecution," Breyer said. "But the government did not check its work."

Prosecutors have also charged a second FedEx subsidiary, and that case appears to be unaffected by Breyer's decision. Additionally, FedEx Corp. and FedEx Corporate Services, Inc. still face charges of money laundering and a count of conspiring to distribute controlled substances.

An email to prosecutors on Saturday was not immediately returned. They argued that FedEx had a duty to correct the mistake, and suggested its attorneys engaged in gamesmanship by only revealing the error after the statute of limitations lapsed, according to Breyer's ruling.

Prosecutors have accused FedEx of conspiring with online pharmacies to ship powerful sleep aids, sedatives, painkillers and other drugs to customers it knew lacked valid prescriptions.

FedEx spokeswoman Melissa Charbonneau said in a statement on Saturday that none of its entities is guilty of "anything more than attempting to assist the government in doing its job of enforcing the law, and we will demonstrate this at trial."

It's not uncommon in a major prosecution with multiple counts to lose some of them, and the conspiracy count still allows the government to prove bad conduct by FedEx Corp., said Rory Little, a former federal prosecutor who now teaches at the University of California, Hastings.

But he said the dismissals could allow FedEx Corp. to distance itself from any convictions that come down by arguing its subsidiaries were to blame.